If your maintenance activities have a large proportion of reactive repairs then the costs of maintaining your assets are larger than they need to be, because the cost of performing unplanned maintenance is typically three times the cost of performing maintenance in a planned manner. Furthermore, if your system is reactive, it is a sign that you are not managing failures. Your biggest costs may be catastrophic failure, systemic failure or equipment defects.
These major meltdowns or one-off events can cost millions of dollars in reactive repairs, lost production and/or major safety/environmental impacts. If you need to lower the cost of maintenance this is an area you can make a significant impact on the P&L.
Proactive maintenance – which is aimed at avoiding such scenarios – is a much more cost-effective approach.
First, what is reactive maintenance? Put simply, it is any maintenance or repair done to a piece of equipment after a failure event. If a gear-box grinds to a halt and your maintenance team rushes to repair it, they are engaging in reactive maintenance.
While the immediate cost of such maintenance may seem low – a day of labor and the purchase of a new part for the machine – the flow-on costs associated with downtime, lost production can be much higher and there is a greater risk of safety and environmental incidents during the shutting down or starting up of equipment.
In companies where reactive maintenance is a large proportion of work performed, there are many hidden costs carried by the business such as higher inventories; premium rates for purchasing spare parts; higher stocking levels for critical spares; more wasted time queuing for tools, materials, and labor; higher overtime levels; more plant downtime; interruption to customer orders; stockouts; offspec quality. The organization and management system has a short term, busy focus often under budget pressure, variations in production, and lots of “things to do”.
On the flip side, proactive maintenance takes a preventative approach. It involves making assets work more efficiently and effectively so that downtime and unexpected failures become a thing of the past. It’s also about trimming unnecessary expenditure from asset management budgets. From a bottom line perspective, it’s about boosting the assets’ contribution to earnings before interest and tax (EBIT).
Strategies associated with proactive maintenance involve understanding and managing the likelihood of failures, some of the common analytical methods to understand the impact of failures on the business include:
- System Analysis – to understand the way equipment failures can impact the availability and production capacity of a system; it allows the analyst to identify and eliminate potential bottlenecks in a system, and thus increase plant capacity
- Criticality Analysis – to rank equipment by the likelihood and severity of failure impact on key business objectives, so you can then channel maintenance resources into the more critical pieces of equipment
- Maintenance Benefit Analysis – to evaluate a maintenance plan and identify areas where maintenance is either not needed or not optimal.
- Spares Optimization – to find the optimum level of spares to hold in-stock, which balances the cost of not having spares available versus taking up storage space on-site
- Repair Vs Replace Analysis – to predict or track the cost of repairs against the cost of replacement, so it becomes clear when to replace assets for best value
- Root Cause Analysis – to analyze the root cause of failures and focus resources on eliminating their reoccurrence, not just fixing the symptoms time and time again.
- Vulnerability Analysis- to systematically review all aspect of the operation in a way to discover tomorrow’s failure, so it can be eliminated in a planned fashion.
As these strategies attest, proactive maintenance is about much more than building a schedule of ongoing maintenance tasks. By understanding and managing failure the maintenance resources can be directed to those areas that require attention in a planned manner, you can actually save significant amounts of money into the long term.
And, above all, it is important to remember that a culture of reactive maintenance is not ideal. In fact, unplanned reactive maintenance is one of the key symptoms that your maintenance strategy isn’t working.